Chernin’s Otter Media Invests $22M Into Anime Service Crunchyroll

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Otter Media says it’s investing another $22 million in Ellation, the parent company of anime-focused video service Crunchyroll.

Founded in 2006, Crunchyroll’s content includes relatively well-known shows like Naruto Shippuden and Sailor Moon, as well as more obscure programming. The company says it now has 20 million registered users and expects to reach 750,000 paying subscribers by the end of this year. And those users are watching 1.5 billion minutes of anime each month.

That success might be surprising, and so might the fact that 80 percent of subscribers come from the English-speaking world. After all, to a non-fan like me, anime’s place in US popular culture seems to have fallen from its heights a decade or so ago.

Crunchyroll co-founder and general manager Kun Gao didn’t dispute that. In fact, he said it’s what led to the company’s success — traditional media wasn’t able to “build on the success of that content and on the ability to fully monetize that audience,” so anime fans had to move online.

“From my perspective Crunchyroll is the leading example of a niche service that has gotten to scale,” added Ellation CEO Tom Pickett. “There are passionate fans willing to pay for a different experience.” He also said it “pulls the community together,” both online and at offline events like conventions.

Pickett and Gao said Crunchyroll will use the new funding to expand its product and engineering capabilities, as well as its original content initiatives (including a recently announced partnership with Sumitomo). It feels like every online video service is embracing original programming, but Gao argued that the Crunchyroll approach is very different from the bigger names.

“We’re trying to build video and product that super-serve a certain set of the audience,” he said. “That’s fundamentally different from Hulu and Netflix, which are trying to go very broad with a thin layer of content.”

To be clear, this funding is a little different from the venture rounds that we cover every day, because the Chernin Group acquired a majority stake in Crunchyroll two years ago. However, Pickett said Ellation still has a separate capital structure from Otter Media (which is a joint venture between Chernin Group and AT&T).

“We’re like any other startup in the Valley,” he said. “We just happen to get our capital from Otter Media. We need to raise money like anyone else; we just have a more predictable path to funds going forward.”